Question 1

The inverse relationship between quantity demanded and price of a good or service can be explained,in part,by

Accepted Answer

A) a shift in the demand curve. 
B) diminishing marginal utility only. 
C) diminishing marginal utility and the rule of equal marginal utilities per dollar. 
D) the real income effect. 
A) a shift in the demand curve. 
B) diminishing marginal utility only. 
C) diminishing marginal utility and the rule of equal marginal utilities per dollar. 
D) the real income effect.

Question 2

Bob's Marginal Utility for consuming beer and pizza with $8.00 in income
 $$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { of Pizza }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Utility }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Beer }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Utility }
\end{array} \
\hline 1 & 45 & 1 & 40 \
2 & 40 & 2 & 40 \
3 & 30 & 3 & 35 \
4 & 15 & 4 & 10 \
5 & - 5 & 5 & 0 \
\hline
\end{array}$$
-In the above table,Bob experiences diminishing marginal utility after consuming how many beers?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 3

The real-income effect is typically small because

Accepted Answer

A) the change in price of one particular item has little effect on total purchasing power. 
B) income has no relation to consumption. 
C) price changes tend to balance out over time. 
D) real-incomes are always rising. 
A) the change in price of one particular item has little effect on total purchasing power. 
B) income has no relation to consumption. 
C) price changes tend to balance out over time. 
D) real-incomes are always rising.

Question 4

-Use the above figure.The consumer's choice changes from YA to YB.Which of the following statements about good Y is true?

Accepted Answer

A) price has increased and the quantity demanded has risen.. 
B) price has decreased and the quantity demanded has risen. 
C) price has decreased and the quantity demanded has fallen. 
D) price has increased and the quantity demanded has fallen. 
A) price has increased and the quantity demanded has risen.. 
B) price has decreased and the quantity demanded has risen. 
C) price has decreased and the quantity demanded has fallen. 
D) price has increased and the quantity demanded has fallen.

Question 5

Karen has decided that she would enjoy eating another cookie.Which of the following statements is consistent with Karen's decision?

Accepted Answer

A) Karen's marginal utility has decreased with a corresponding decrease in total utility. 
B) Karen's marginal and total utility remain unchanged. 
C) Karen's marginal utility has decreased but it is unclear what has happened to total utility. 
D) Karen's total utility has increased but it is unclear what has happened to her marginal utility. 
A) Karen's marginal utility has decreased with a corresponding decrease in total utility. 
B) Karen's marginal and total utility remain unchanged. 
C) Karen's marginal utility has decreased but it is unclear what has happened to total utility. 
D) Karen's total utility has increased but it is unclear what has happened to her marginal utility.

Question 6

The price of a large pepperoni pizza used to be $14,but this week the price rose to $18.With a budget of just $30,you can't afford as many pizzas at the higher price.This change in consumer behavior reflects the

Accepted Answer

A) real income effect. 
B) substitution effect. 
C) nominal income effect. 
D) concept of diminishing marginal utility. 
A) real income effect. 
B) substitution effect. 
C) nominal income effect. 
D) concept of diminishing marginal utility.

Question 7

The consumer optimum is found by using

Accepted Answer

A) marginal utility. 
B) total utility. 
C) total utility minus marginal utility. 
D) total utils. 
A) marginal utility. 
B) total utility. 
C) total utility minus marginal utility. 
D) total utils.

Question 8

Discuss the substitution and real-income effects of a price decrease.

Accepted Answer

The substitution effect of a price decre

Question 9

Utility analysis is the analysis of

Accepted Answer

A) the formation of tastes and preferences. 
B) the differences of tastes and preferences across individuals. 
C) the consumption decisions of people based on utility maximization. 
D) how consumers determine the utility they receive from consumption. 
A) the formation of tastes and preferences. 
B) the differences of tastes and preferences across individuals. 
C) the consumption decisions of people based on utility maximization. 
D) how consumers determine the utility they receive from consumption.

Question 10

The change in people's purchasing power that occurs when the price of a good they purchase changes,assuming all else is held constant is known as

Accepted Answer

A) the substitution effect. 
B) the real income effect. 
C) the elasticity effect. 
D) the multiplier effect. 
A) the substitution effect. 
B) the real income effect. 
C) the elasticity effect. 
D) the multiplier effect.

Question 11

A consumer will achieve the highest level of utility possible when she consumes

Accepted Answer

A) at the point at which the highest indifference curve is tangent to the budget constraint. 
B) at the point at which the indifference curve crosses the budget constraint. 
C) at a point to the left of the budget constraint. 
D) just below the point where the indifference curve crosses the budget constraint. 
A) at the point at which the highest indifference curve is tangent to the budget constraint. 
B) at the point at which the indifference curve crosses the budget constraint. 
C) at a point to the left of the budget constraint. 
D) just below the point where the indifference curve crosses the budget constraint.

Question 12

-Use the above figure.Last week Joe consumed combination "A" of goods "X" and "Y." This week he purchased combination "B." The reason for this change is that the

Accepted Answer

A) price of good X has increased. 
B) price of good X has decreased. 
C) price of good Y has decreased. 
D) price of good Y has increased. 
A) price of good X has increased. 
B) price of good X has decreased. 
C) price of good Y has decreased. 
D) price of good Y has increased.

Question 13

What is utility and what are its characteristics?

Accepted Answer

Utility is the want-satisfying power of

Question 14

When total utility is falling,

Accepted Answer

A) marginal utility is at a maximum. 
B) marginal utility is at zero. 
C) marginal utility is negative. 
D) marginal utility has decreased,but is now increasing. 
A) marginal utility is at a maximum. 
B) marginal utility is at zero. 
C) marginal utility is negative. 
D) marginal utility has decreased,but is now increasing.

Question 15

To derive the demand curve for good X,all the following are constant EXCEPT

Accepted Answer

A) the price of good X. 
B) income. 
C) the price of good Y. 
D) tastes and preferences. 
A) the price of good X. 
B) income. 
C) the price of good Y. 
D) tastes and preferences.

Question 16

-Refer to the above figures.Amy's total utility for chocolate chip cookies reaches a maximum at 4 cookies.Which panel best represents marginal utility?

Accepted Answer

A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D 
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D

Question 17

If the price of X is $3 and the price of Y is $5,then,in a consumer optimum,

Accepted Answer

A) the quantity purchased of Y must be 60 percent of the quantity of X purchased. 
B) the quantity purchased of Y must be 67 percent of the quantity of X purchased. 
C) the marginal utility of Y must be 67 percent more than the marginal utility of X. 
D) the marginal utility of X must equal 3 and the marginal utility of Y must equal 5. 
A) the quantity purchased of Y must be 60 percent of the quantity of X purchased. 
B) the quantity purchased of Y must be 67 percent of the quantity of X purchased. 
C) the marginal utility of Y must be 67 percent more than the marginal utility of X. 
D) the marginal utility of X must equal 3 and the marginal utility of Y must equal 5.

Question 18

Jill likes lobsters but she does not eat lobsters in every meal.How can utility theory explain this?

Accepted Answer

Even though Jill likes lobsters,she is p

Question 19

Carol is very hungry.She has just sat down to eat.Her first bite gives her a certain level of utility.Her second bite increases her utility by more than the first bite.Her third bite increases her utility by more than the second bite.Carol has 40 bites left before she finishes.Which of the following statements is true about Carol?

Accepted Answer

A) Carol is being inconsistent with the law of diminishing marginal utility. 
B) Carol's total utility decreases with each bite. 
C) Carol's marginal utility will be negative when she takes her last bite. 
D) Carol will eventually experience diminishing marginal utility by the time she finishes eating,if her marginal utility begins to decline. 
A) Carol is being inconsistent with the law of diminishing marginal utility. 
B) Carol's total utility decreases with each bite. 
C) Carol's marginal utility will be negative when she takes her last bite. 
D) Carol will eventually experience diminishing marginal utility by the time she finishes eating,if her marginal utility begins to decline.

Question 20

The price of a hamburger is $1 and the price of a movie is $4 and the consumer has $10.A consumer has purchased 2 hamburgers and 2 movies,receiving 25 units of utility for the second hamburger and 100 units of utility for the second movie.The set of goods

Accepted Answer

A) is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good. 
B) is an optimum since the entire income is spent and total utility is minimized. 
C) is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies. 
D) is not an optimum because the consumer has not spent all of his money. 
A) is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good. 
B) is an optimum since the entire income is spent and total utility is minimized. 
C) is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies. 
D) is not an optimum because the consumer has not spent all of his money.

The inverse relationship between quantity demanded and price of a good or service can be explained,in part,by

Bob's Marginal Utility for consuming beer and pizza with $8.00 in income Quantity of Pizza Marginal Utility Quantity of Beer Marginal Utility 1 45 1 40 2 40 2 40 3 30 3 35 4 15 4 10 5 -5 5 0 -In the above table,Bob experiences diminishing marginal utility after consuming how many beers?

The real-income effect is typically small because

-Use the above figure.The consumer's choice changes from YA to YB.Which of the following statements about good Y is true?

Karen has decided that she would enjoy eating another cookie.Which of the following statements is consistent with Karen's decision?

The price of a large pepperoni pizza used to be $14,but this week the price rose to $18.With a budget of just $30,you can't afford as many pizzas at the higher price.This change in consumer behavior reflects the

The consumer optimum is found by using

Discuss the substitution and real-income effects of a price decrease.

Utility analysis is the analysis of

The change in people's purchasing power that occurs when the price of a good they purchase changes,assuming all else is held constant is known as

A consumer will achieve the highest level of utility possible when she consumes

-Use the above figure.Last week Joe consumed combination "A" of goods "X" and "Y." This week he purchased combination "B." The reason for this change is that the

What is utility and what are its characteristics?

When total utility is falling,

To derive the demand curve for good X,all the following are constant EXCEPT

-Refer to the above figures.Amy's total utility for chocolate chip cookies reaches a maximum at 4 cookies.Which panel best represents marginal utility?

If the price of X is $3 and the price of Y is $5,then,in a consumer optimum,

Jill likes lobsters but she does not eat lobsters in every meal.How can utility theory explain this?

The price of a hamburger is $1 and the price of a movie is $4 and the consumer has $10.A consumer has purchased 2 hamburgers and 2 movies,receiving 25 units of utility for the second hamburger and 100 units of utility for the second movie.The set of goods

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 7: Consumer Choice

The inverse relationship between quantity demanded and price of a good or service can be explained,in part,by

Bob's Marginal Utility for consuming beer and pizza with $8.00 in income Quantity of Pizza Marginal Utility Quantity of Beer Marginal Utility 1 45 1 40 2 40 2 40 3 30 3 35 4 15 4 10 5 -5 5 0 -In the above table,Bob experiences diminishing marginal utility after consuming how many beers?

The real-income effect is typically small because

-Use the above figure.The consumer's choice changes from YA to YB.Which of the following statements about good Y is true?

Karen has decided that she would enjoy eating another cookie.Which of the following statements is consistent with Karen's decision?

The price of a large pepperoni pizza used to be $14,but this week the price rose to $18.With a budget of just $30,you can't afford as many pizzas at the higher price.This change in consumer behavior reflects the

The consumer optimum is found by using

Discuss the substitution and real-income effects of a price decrease.

Utility analysis is the analysis of

The change in people's purchasing power that occurs when the price of a good they purchase changes,assuming all else is held constant is known as

A consumer will achieve the highest level of utility possible when she consumes

-Use the above figure.Last week Joe consumed combination "A" of goods "X" and "Y." This week he purchased combination "B." The reason for this change is that the

What is utility and what are its characteristics?

When total utility is falling,

To derive the demand curve for good X,all the following are constant EXCEPT

-Refer to the above figures.Amy's total utility for chocolate chip cookies reaches a maximum at 4 cookies.Which panel best represents marginal utility?

If the price of X is $3 and the price of Y is $5,then,in a consumer optimum,

Jill likes lobsters but she does not eat lobsters in every meal.How can utility theory explain this?

The price of a hamburger is $1 and the price of a movie is $4 and the consumer has $10.A consumer has purchased 2 hamburgers and 2 movies,receiving 25 units of utility for the second hamburger and 100 units of utility for the second movie.The set of goods

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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